I have encountered those who moved from tens of thousands of dollars to only a few bucks within weeks due to lack of fundamental principles of managing finances.
Most often, people get excited whenever they have a savings plan, whether to:
- Acquire a home
- Buy a car
- Go for a vacation
- Start a business they are passionate about
However, many don’t achieve this because of lack of financial discipline and commitment that tends to fade away over time.
The truth is that we’ve all been through this; money comes in at the start of the month, and in the end, we are utterly clueless about what happened to the funds in barely 30 days.
I asked Top Loan Expert Anthony Marinaccio to provide his top 5 tips below to help you improve your financial management and give you a headstart to achieving your financial goals faster.
1. Plan Your Savings and Your Spending
The great Benjamin Franklin once said,
“Beware of little expenses. A small leak will sink a great ship.”
Keeping track of your expenses and having control over it will help you stick to your budget. Besides, it saves you the temptation to compromise your savings.
Many Americans make the mistake of only planning their savings:
- Whether saving for a home,
- A car,
- A business,
- Or getting out of debt.
And neglect the necessity to plan their spending. It is essential to put your savings and expenditures into consideration during your financial planning stage.
My advice? Make a budget plan for both your saving and your expenses and confine yourself within your budget.
2. Your Savings First, then Your Spending
Keeping a percentage of your income, say 30% every month, can be challenging if you are not firmly committed to the act. Especially when you have several monthly obligations, you cannot do without.
A very effective way to do this is by putting your savings into a goal-based account different from your general account.
Doing this will help you in resisting the temptation of pulling from your savings account. Whenever you receive your weekly or monthly income, make your percentage saving your No. 1 priority and then plan your expenses based on the leftover and not otherwise.
3. Learn the art of keeping Records
Writing down your budget for the week or the month may appear to be old-fashioned and traditional. On the other hand, its effectiveness to help you stay consistent with your budget plan cannot be overemphasized.
As good as making a physical budget is, you need a lot more than that to be committed to your budget. The Budgeting Master, William Feather, said that a budget tells us what we can’t afford, but it doesn’t keep us from buying it.
In summary, always write down your budget and don’t spend out of what you have planned.
4. Avoid Running Into More Debt
Getting out of existing debt should be a priority in your financial goals. Running into debt comes by borrowing from friends or taking a loan to fulfill an economic purpose.
It’s not bad, but staying long in debt, or adding more debt is a quicker way to ruin your finances and live a miserable life.
If you are already in debt, let your priority be paying it off, and if you are not in one, your top priority is staying away from it. As much as you can, avoid situations that can put you in debt because it’s a sure way to kill your financial goals faster than unnecessary spending.
5. When Your Income Increases, Increase Your Savings and Not Your Spending
You can increase your income in several ways. Whether cutting down your expenses, embracing a side hustle, getting a better paying job, or negotiating for an increase in your salary, all these can increase your income.
In case this happens, consider doubling your savings to grow it faster rather than increasing your expenses.
In summary, when your income increases, increase your savings by almost 90% of the rise in your income. You would achieve your financial goals two times faster this way.